Correlation Between BYD Co and Vicinity
Can any of the company-specific risk be diversified away by investing in both BYD Co and Vicinity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BYD Co and Vicinity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co Ltd and Vicinity Motor Corp, you can compare the effects of market volatilities on BYD Co and Vicinity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BYD Co with a short position of Vicinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Vicinity.
Diversification Opportunities for BYD Co and Vicinity
Excellent diversification
The 3 months correlation between BYD and Vicinity is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Vicinity Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Motor Corp and BYD Co is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BYD Co Ltd are associated (or correlated) with Vicinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Motor Corp has no effect on the direction of BYD Co i.e., BYD Co and Vicinity go up and down completely randomly.
Pair Corralation between BYD Co and Vicinity
Assuming the 90 days horizon BYD Co Ltd is expected to generate 0.6 times more return on investment than Vicinity. However, BYD Co Ltd is 1.67 times less risky than Vicinity. It trades about 0.01 of its potential returns per unit of risk. Vicinity Motor Corp is currently generating about -0.02 per unit of risk. If you would invest 5,908 in BYD Co Ltd on January 31, 2024 and sell it today you would lose (476.00) from holding BYD Co Ltd or give up 8.06% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BYD Co Ltd vs. Vicinity Motor Corp
Performance |
Timeline |
BYD Co |
Vicinity Motor Corp |
BYD Co and Vicinity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BYD Co and Vicinity
The main advantage of trading using opposite BYD Co and Vicinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Vicinity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vicinity will offset losses from the drop in Vicinity's long position.BYD Co vs. Compagnie Gnrale des | BYD Co vs. Bridgestone Corp ADR | BYD Co vs. Continental Aktiengesellschaft | BYD Co vs. Douglas Dynamics |
Vicinity vs. Ford Motor | Vicinity vs. General Motors | Vicinity vs. Goodyear Tire Rubber | Vicinity vs. Li AutoInc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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